Built to Last: Successful Habits of Visionary Companies (Good to Great Book 2)

by Jim Collins

there is any one “secret” to an enduring great company, it is the ability to manage continuity and change—a discipline that must be consciously practiced, even by the most visionary of companies.

“Genius of the AND”—the paradoxical view that allows them to pursue both A AND B at the same time.

we found that creating and building a visionary company absolutely does not require either a great idea or a great and charismatic leader.

Coffin’s greatest creation was the General Electric Company. Luck favors the persistent. This simple truth is a fundamental cornerstone of successful company builders. The builders of visionary companies were highly persistent, living to the motto: Never, never, never give up. But what to persist with?

Be prepared to kill, revise, or evolve an idea

It means spending less of your time thinking about specific product lines and market strategies, and spending more of your time thinking about organization design.

stronger organizational orientation than in the comparison companies, regardless of their personal leadership style.

Walton valued change, experimentation, and constant improvement. But he didn’t just preach these values, he instituted concrete organizational mechanisms to stimulate change and improvement. Using a concept called “A Store Within a Store,”

F. Scott Fitzgerald pointed out, “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”

The Washington Post wrote of the crisis that “Johnson & Johnson has succeeded in portraying itself to the public as a company willing to do what’s right, regardless of cost.”47

First, social psychology research strongly indicates that when people publicly espouse a particular point of view, they become much more likely to behave consistent with that point of view even if they did not previously hold that point of view.

The organization’s essential and enduring tenets—

Indeed, a visionary company continually pursues but never fully achieves or completes its purpose—like chasing the earth’s horizon or pursuing a guiding star.

Disneyland will never be completed, as long as there is imagination left in the world.

It is absolutely essential to not confuse core ideology with culture, strategy, tactics, operations, policies, or other noncore practices. Over time, cultural norms must change; strategy must change; product lines must change; goals must change; competencies must change; administrative policies must change; organization structure must change; reward systems must change. Ultimately, the only thing a company should not change over time is its core ideology—

Good Enough Never Is: A continual process of relentless self-improvement

BHAG only helps an organization as long as it has not yet been achieved.

the establishment of mission-oriented research and proper targets.

Create BHAGs that take a life of their own and thereby act as a stimulus through multiple generations of leadership.

I am perfectly confident that it is open to us to become the most powerful, the most serviceable, the most far-reaching world financial institution that has ever been.

“keeping the company moving” and that vigorous movement in any direction is better than sitting still; always have something to shoot for, he advised.61

Rather, the point is to build an organization that fervently preserves its core ideology in specific, concrete ways. The visionary companies translate their ideologies into tangible mechanisms aligned to send a consistent set of reinforcing signals. They indoctrinate people, impose tightness of fit, and create a sense of belonging to something special through such practical, concrete items as:

Orientation and ongoing training programs

Tolerance for honest mistakes

Celebrations that reinforce successes, belonging, and specialness

office layout that reinforces norms and ideals

They need basic guideposts, but not rules.

Control Your Own Destiny or Someone Else Will:

visionary companies more aggressively harness the power of evolution.

“Listen to anyone with an original idea, no matter how absurd it might sound at first.”

“If you put fences around people, you get sheep. Give people the room they need.”

3M presents yet another classic example of how a creationist strategic planning perspective can so easily confuse the “why” and “how.”

3M continued to evolve into new—and often unexpected—arenas by encouraging individual initiative.

managers spent most of their time in meetings—

the discipline of self-improvement stands out as one of the most clear differences between the visionary and comparison companies.

Put another way, they distinguish their timeless core values and enduring core purpose (which should never change) from their operating practices and business strategies (which should be changing constantly in response to a changing world).

“what we stand for and why we exist” that does not change (the core ideology) and sets forth “what we aspire to become, to achieve, to create”

Core purpose, the second component of core ideology, is the organization’s fundamental reason for being.

enduring purpose, no matter how much the world changes.

What would be lost if the company ceased to exist?

If you woke up tomorrow morning with enough money in the bank that you would never need to work again, how could we frame the purpose of this organization such that you would want to continue working anyway?

“What core values do we actually hold?”

vision-level BHAG we suggest thinking about the following four categories: target, common enemy, role model, or internal transformation.

organization’s fundamental reason for existence, which like a star on the horizon can never be reached; it guides and inspires forever. A BHAG, on the other hand, is a specific goal which, like a specific mountain to climb, has a specific time frame and can be achieved.